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New Report Debunks Myths Surrounding Public-Private Transportation Partnerships

By Kevin Holtsberry

In an era of declining transportation funding, public-private partnerships have the potential to offer greater flexibility and increased infrastructure investment. Given their potential, and the importance of the issue to our state’s future, this tool should be evaluated based on facts and data not myths and emotional reactions. To that end we here at the Buckeye Institute partnered with the Reason Foundation to release a new report: Ten Myths and Facts on Transportation Public-Private Partnerships.

This report, the first of a series, seeks to clear away the fear and misconceptions surrounding public-private partnerships (sometimes know as PPPs or P3s) so that policy makers and the public can have an informed debate about how best to address Ohio’s critical transportation and infrastructure needs and how this tool might fit within the state’s larger strategy.

Too often confusion and misinformation has dominated debates surrounding “privatization” and P3s; whether it is the turnpike or parking garages or other government assets. I believe this report will help demystify the issue based on real experience and data.

Here are a few examples from the report:

Myth: PPPs involve the “sale” of roads to private interests.

Fact: PPPs do not involve the sale of any facilities by governments to private sector interests.

Myth: Private toll road operators can charge unlimited tolls in PPP deals.

Fact: Future toll rates are a policy decision and are determined by state officials upfront before a concession agreement is signed.

Myth: Government loses control of public assets in PPP deals.

Fact: Government never loses control and can actually gain more control of outcomes in well-crafted PPP arrangements.

Myth: PPPs involve selling our roads to foreign companies.

Fact: Foreign investment in our nation’s infrastructure represents the reverse of outsourcing. It’s could more properly be viewed as “insourcing” where significant amounts of foreign investment are spent here in the state.

Myth: Government ends up holding the bag if a PPP project goes bankrupt.

Fact: In the event of a corporate bankruptcy on the part of a private sector investor-operator, the asset would revert to the project lenders who, with permission from the state, would select a new operator.

Effective and efficient government should always be our goal, but with transportation funding shrinking and demand growing, it is critical we evaluate all our options. P3s should be considered as part of Ohio’s broader strategy as they have the potential to offer greater flexibility and increased leverage of public assets.

An informed debate will lead to better decisions and more options for Ohio. There is too much at stake to settle for anything less.

Kevin Holtsberry is president of the Buckeye Institute for Public Policy Solutions.